Finacial Stability

Getting rich is pretty high up on most people’s list of financial hopes and aspirations. After all, it will allow you to not only have more financial security but also have more options. And, of course, you would have the ability to spend on more of the things you want.

The problem with the idea of getting “rich,” though, is that it takes a lot of time and effort. Get-rich-quick schemes are almost always nothing but a way to prey on those who are struggling financially. Unless you are born into a wealthy family and a large inheritance is passed to you, you will likely have to become rich through a combination of hard work and financial diligence.

In reality, there are arguably no secrets to becoming rich. Time-tested approaches are generally your best bet, and our experts confirmed that. For now, it woul be advised if you:

Avoid (and Pay Down) Debt

Debt is not necessarily bad in all instances, but it is something to be avoided most of the time. For instance, student loans can be beneficial if the principal and interest rate are not excessive and they help you pursue a lucrative career.

“Some experts would contend that student loans are bad debt, but I disagree,” said Robert Johnson, chairman and CEO at Economic Index Associates. “I would categorize modest student loan debt as being ‘good debt.’ In my opinion, student loans get a bad rap.”

Again, the emphasis is on how you use them. Student loans can certainly be bad if the numbers don’t work in your favor. “There is no doubt that the system has been abused and that some students have accumulated a mountain of debt and have earned degrees that simply won’t provide the earning power to pay that debt back,” Johnson said.

Johnson also emphasized that credit card debt is always bad debt and should be prioritized over student loans. Ariel Acuña (founder of independent wealth management firm LTG Capital LLC) recommended putting at least 20% of your paycheck toward debt if you have it.

Make your finances personal.

It’s very important to say this right off the bat: your personal finances are personal. That doesn’t mean personal in the sense that you can’t talk to anyone about your money. Making your finances personal means focusing on your situation and not worrying about anyone else’s situation.

This is one of the most important things for helping you to reach financial stability. We live in a culture where we constantly compare ourselves to others. We are told that we need to live a certain lifestyle because that’s how successful people live.

Block out all that noise! Forget about keeping up with the Joneses. It doesn’t matter if your friends earn more money than you. The only thing that matters is how much you have and how you can use what you have to reach your goals.

Another important part of this rule is forgetting about the “right way” to do things. Yes, some financial decisions are generally better than others. However, many things in personal finance depend on the person. There isn’t one specific method or timetable that’s best for everyone.

If you create a savings goal and you miss it, don’t beat yourself up for doing the wrong thing. Just look at what happened. What went well and what didn’t go well? Use that information to improve for next time. Start and follow a budget.

That’s right, budgeting. You’ve most likely heard this advice before. Budgets aren’t as bad as they may sound though. A budget is just a tool to help you spend money on the things you want to spend money on.

First of all, why is a budget important? When you keep a budget, you can track where your money is going. It’s easy to spend more than you should if you don’t actually know how much you’re spending. So more than anything else, a budget helps you keep track of your money.

Once you know how you spend your money, you can make a plan. There are always essential things that you have to spend money on. That could include your rent or mortgage, utility bills, food, car payments or transportation to and from work. These essential things should make up about half of your spending. (Experts generally recommend that your rent/mortgage not make up more than 30% of your monthly spending.)

Then you should try to put 10% to 20% of the remaining money toward your future. That means your retirement account, emergency fund and other savings accounts. Once you do all that, you can live off the remaining money. To make sure you don’t overspend, you might want to figure out how much you should spend each month on common things like eating out or buying clothes. Regardless of exactly what you spend money on, try to spend purposefully. Put your money toward the things that are important to you. Then cut back on the rest.